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9/10/2012 9:44AM

Significant Challenges Still Face Housing Industry

Home prices during the first half of 2012 posted their strongest gains in six years, the clearest sign that more U.S. housing markets have hit bottom. But don't confuse that with a full-on recovery. WSJ's Nick Timiraos reports. Photo: Getty Images.

This transcript has been automatically generated and may not be 100% accurate.

... the the ... the housing market may have hit bottom ... but don't confuse that with the recovery WSJ's Victoria us is here with deatails naked morning morning ... so ... housing prices in the first half ... posted some of their biggest gains ... in six years straight and it but but ... first I'll what's driving up prices ... one of course we really have any gains for futures aam but right now and low inventory is that Trevor price gains to have fewer homes been listed in ... commodities markets are often a third from a year ago in terms of inventory so you only need ... a little but of an uptick in demand ... to get prices to rise and that's exactly what's happened for the first half of this year ... and what's behind the low inventories ... will all a mentor is determined by a number different things renowned banks of been much lower to list foreclosed properties are getting better about approving short sales ... where the ... bank allows the seller to give up the home and loss ... you have a lot of people who frankly can sell the houses are not willing to sell their houses they own more than their properties are worth ... about twenty three percent of mortgage borrowers are underwater ... and if you look at the number that have enough money to make a twenty percent down payment ... on their next house or with the equity in their current house pale an agent's commission ... about forty five percent of borrowers or I would ... either under equity so you really have a large ... chunk of market that just can't trade under the Audrina is that I like to turn a dent in negative equity under equity ... and then I'm you know a lot of investors and that are out buying up these houses and pulling them off the market converting them into rattle since all these different things are ... leading to huge ... year over year declines in the number of homes listed for sale ... and are getting more of buyers of the right now because mortgage rates are low ... so a lot of mom and pop buyers and maybe this is the time for me enough offense and see all these investors at her going in ... and buying a home what's interesting you mention your piece is that ... rising prices are necessarily a sign of strength of of of higher sales in you mention the story of the next ... two and a fast in Phoenix is a great example because it has done very well over the past year which is a big surprise a lot of people read because it was so hard hit ... aam ... but when you have happening right now is actually a ... inventories of them so far from euro the number of bank owned properties listed for sale in July was down seventy percent from year-ago ... and because those foreclosures were treading water sales over the past year you actually had a ... year over year decline in sales for humans to live about seven percent ... and a lot of analysts seven even as prices went up to a nineteen percent drop seventeen percent year over year but the actual of all sales were down in your seen I mean prices will fall off that we can sustain these kind of price increases in places like Phoenix ... for a longer time if there are enough homes on the market and so this is a way to the markets planning equilibrium ... prices will come down a will that ... because there just aren't enough properties out there to keep ... the people by not reduce crime rates are probably has set a floor ... and one these markets and so that's a good sign ... but what I'm arguing today is that he probably won't be one to justify this continued in ... the seventeen percent year over year increase in places like the next day and for more on that be sure to check out Nick's Outlook column which is great and has tons of diesel fuel at the nitty gritty of housing the shuttering its comics asymmetric honest